Telecom Italia puts off Net ops merger

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Thursday's Top Stories Telecom Italia puts off Net ops merger

Compiled by CBS MarketWatch Last Update: ROME (CBS.MW) -- A regulatory hurdle has forced Telecom Italia SpA to put off approval for a planned 30 billion euro ($28.96 billion) merger of its Internet operations with Seat Pagine Gialle SpA, the owner of Italy's biggest Web portal, according to a report in the Wall Street Journal. The two companies are awaiting a ruling from Italy's securities commission, Consob, and will convene board meetings to discuss the merger's conditions March 15. The obstacle revolves around a possible need for Telecom Italia to bid for all shares in Seat PG after the merger is closed, the newspaper said, citing people familiar with the talks. Telecom Italia
TI, +0.40%
which announced the preliminary deal last month, has already agreed to bid for all shares in Seat PG at their market price at the time, providing an exit to investors who aren't interested in the planned combination. It doesn't want to have to bid for all shares in the combined group at levels close to current, higher, prices. One of the key reasons for the planned merger between the phone company's unlisted Internet-service provider Tin.it and Seat PG, was to list Telecom Italia's Internet operations on the stock market without the need to go through the complex procedures of an initial public offering. Having to make a bid to buy all outstanding shares at a credible price would defeat this purpose, people familiar with the matter say. The Wall Street Journal

EC may veto Algroup, Pechiney, Alcan merger BRUSSELS (CBS.MW) -- European antitrust authorities are likely to veto the proposed three-way, $10.6 billion merger of Canada's Alcan Aluminium Ltd., Switzerland's Algroup and France's Pechiney SA, according to a report in the Wall Street Journal, citing people familiar with the situation. However, those people said they may allow a deal between two of the companies to proceed. The aluminum companies were meeting with European Commission antitrust officials late Wednesday in order to try to find last-minute concessions that would satisfy their concerns, according to those persons. But while "the companies have made a lot of effort" with their concessions so far, any further offers would be "deal breakers," one of these people said. "They can't go further." The deadline for a decision on the deal is March 22, but the commission said earlier this week that it would probably rule by March 8. Under terms of the deal announced last August, Alcan
AL, -0.45%
would offer its own shares in exchange for Pechiney
PY, -0.53%
shares and Algroup shares. Alcan will offer 20.1745 common shares for each Algroup share. For each Pechiney share, Alcan will offer 1.7816 common shares. The Wall Street Journal

China considering new limits on foreign bank lending SHANGHAI, China (CBS.MW) -- China is considering new limits on how much local money foreign banks can lend in the country, a move that highlights how Beijing hopes to protect the most sensitive parts of its economy before it enters the World Trade Organization, according to a report in the Wall Street Journal. The regulations would severely limit the amount of local currency that foreign banks can borrow from their Chinese counterparts, choking off a key source of funds to foreign banks. Central bank officials say the issue is still under discussion, and that the rule could be scaled back. But restrictions of some form will likely be announced in the coming months, they say. Already, talk of the change has foreign bankers fuming. Coming just months after China promised to open its fragile banking industry as part of its deal to join the WTO, the bankers say the new restrictions violate the spirit of China's WTO talks. "The new rules could have such a negative impact that it's unthinkable," says the branch manager of a large Western bank in Shanghai. The Wall Street JournalGerman minister backs strong euro

BERLIN (CBS.MW) -- Germany's finance minister, Hans Eichel, on Tuesday called for a strong euro in an effort to dispel market perception that Berlin favors a weaker European currency to reinforce domestic economic growth, in an interview with the Financial Times and FT Deutschland. "We all believe the markets should pay attention to the fundamentals," said Eichel. "The fundamentals are much more positive about the euro than they were at its birth 14 months ago." He stressed that Germany was deeply concerned by the euro's external value. "We want a strong euro. Also in terms of its external value," he said. His remarks contrast with earlier statements from German government officials. The Berlin government, led by Eichel's Social Democratic party, has put job creation at the top of its agenda and has until now given the impression it was happy with a weak currency. Eichel's comments come before today's meeting of the European Central Bank's policy-making council, which must decide whether rising inflationary pressures-- caused partly by the weak euro -- are serious enough to warrant an interest rate increase.Financial Times

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